For new grads, the future is literally waiting for you to arrive. As you transition from student into the “real world,” one of the smartest decisions you will make is to start off on the right foot financially with good money management habits.
“When you graduate from school and land your first job, the temptation to spend, spend, spend your income can be significant. Pay special attention to specific money management skills that will set you up for success as you progress through your career,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“You may have had some financial responsibility up to this point, but if you begin your earning career guided by responsible money management, you won’t spend years playing catch up down the road,” says Schwartz.
Here are some money tips for new grads to start off on the right foot financially:
This may seem incredibly obvious, but your very first step in good financial management is to set some short, medium and long term goals. After all, how will you be able to measure your success or identify areas of improvement if you don’t have a plan?
Set SMART goals; be specific, with dates and amounts associated with goals.
Credit does not equal money
With your first “real” job, you may see a significant increase in your income. This may mean that you are eligible now for more credit. Taking out credit is a good idea if you are using it as part of your overall financial strategy to establish a good credit history. This will be important down the road should you want to buy a car or a house.
However, the inclination may be to treat available credit as money available for you to spend. Make a habit) to pay off any balance that you accumulate every month. Not only will this help you establish good credit, it will help keep your cash flow flowing.
Live and breathe your budget
There is no better time than right at the beginning to understand the tremendous value of budgeting. You have to set out a detailed monthly budget that will account for all of your spending.
This will help you manage your money however it will also establish a framework to live within your means. Of all the lessons you’ve learned in school, this life lesson may be the most valuable. Better yet, live below your means to always give yourself some wiggle room.
Don’t forget about savings
You have just started your career, and saving for your retirement might seem downright silly however every good financial management plan must contain a savings component. People often argue that they don’t have enough to allocate towards savings, especially when they are servicing debt (student loans, anyone?). Every little bit counts. It’s about establishing a habit.
Oh- and those retirement savings aren’t just for your retirement. Did you know that you can withdraw from your RRSP for a down payment on a house? Or should you decide to go back to school again, you can use RRSP funds for your tuition?
As a new grad with student debt, accumulating more debt will not propel you into the future in quite the same way you may have hoped that things would progress after graduation. The first step is to set up a plan that addresses paying down that debt and setting yourself up for future success. Call one of our trained credit counsellors or use our online debt analysis.